Article: For Some Well-to-do China-born, A Faster, More Useful, And Perhaps Less Expensive Alternative Than Eb-5 Investment To U. S. Immigration By Alan Lee, Esq.

For Some Well-to-do China-born, A Faster, More Useful, And Perhaps Less Expensive Alternative Than Eb-5 Investment To U. S. Immigration

EB-5 investment into the U. S. by the China-born in the past has proven a
boom to U. S. cash starved projects, investors, immigration lawyers, and
Chinese agents. Through the practice of gerrymandering almost disconnected
parts of municipalities, much of the risk-taking which was supposed to be a
component of the law has been removed for investors giving $500,000
(instead of the regular $1 million) for projects in targeted employment
areas (TEA’s) for which the unemployment rate is supposed to be at least
150% of the national average. TEA projects abound in the richest areas,
Midtown Manhattan being a prime example. However, there is a supreme party
killer which has come into being because of the very success of the
marketing effort to Chinese nationals – exhaustion of visa numbers as
Mainlanders have taken up 85% or more of the world’s EB-5 quota over the
years to the point that there is now a tremendous waiting time before
China-born can expect to receive a conditional green card from the EB-5
category. U.S.C.I.S.’s Ombudsman estimated in its 2017 annual report that
the waiting time for Chinese nationals beginning an investment today could
be 10 years or even longer. Currently the EB-5 China availability date has
been stuck at July 22, 2014 since October 2017.

The waiting time is intolerable to many investors as it means that, not
only do they have to watch their case for a long period of time, but also
that their children may age out (over the age of 21) and not be eligible to
immigrate at the time that the principal investor’s priority date is
reached. Under the Child Status Protection Act (CSPA), a child’s age can
only be “frozen” where the child is under the age of 21 (with credit for
the time that the I-526 Immigrant Petition by Alien Entrepreneur pended
with U.S.C.I.S.) when that priority date is reached and becomes available
on the State Department visa bulletin. Even with the reported softening
stance of U.S.C.I.S. allowing children to be the principal investors, how
young would a child have to be to ensure his or her immigration vis-à-vis
the immigration requirement that the investor be legally capable of signing
a binding contract?

The backlog situation does not have a solution at present, and may not be
resolved as many members of Congress have been put off by the perceived
abuses of the program. A fix was not seriously attempted as part of the
Omnibus Spending Act which extended the status quo until September 30,
2018.

For many well-to-do Chinese nationals who own or are majority shareholders
of companies in China, use of the EB-1C immigration category for
multinational executives and managers could be a viable alternative
allowing U. S. immigration within 1-2 years. The requirements are that the
China company be of reasonable size, and that the U. S. company be more
than a tiny company, e.g. China company 100+ employees and U. S. company
10-20 employees. The U. S. company could be directly acquired by either the
China company or the majority shareholder. (Beginning a new company from
scratch in the U. S. rather than acquiring an existing company would add
time and difficulty to the case). Such would satisfy the requirement that
the companies be “affiliated.” The person to immigrate would also have to
show working experience with the China company as an executive or manager
of at least one year out of the past three before filing the petition. As a
multinational executive or manager transferring between the China company
and the U. S. company, the law would not require advance clearance by the
Department of Labor for immigration, and a petition could be directly
submitted by the U. S. company for the individual.

Two questions that come up in this context are whether an L-1 visa
(nonimmigrant intracompany transferee visa) approval is required before
embarking on the immigrant visa petition, and whether this path which
involves acquiring a U. S. company is too difficult. The short answer to
the first question is that an L-1 approval notice, while helpful, is not a
requirement to beginning a permanent residence application for a
multinational executive or manager. For the second, while EB-5 investments
are quite easy to get into (930 regional investment centers as of April 2,
2018) with regional center heads using tremendous advertising and middlemen
to push and shove potential investors to their projects, effort on the part
of the individual or China company will generally be required in choosing
this path. Companies that are already doing business in the United States
could use their network of customers and suppliers to assist, or go through
business agencies, advertisements in trade journals or newspapers, or
organizations which attempt to put business buyers and sellers together,
etc. In addition, this would not have to be a lone effort as the individual
or China company could band together with another China company wishing to
do the same thing since the law contemplates investment percentage as low
as 50% for a recognized “affiliation.”

The EB-1C category is part of the first employment-based preference (EB-1)
which is traditionally open for China-born as well as the rest of the world
except that in the past two years, the category backlogged from
June-September (FY 2016 and FY 2017) for China before springing open again
in October. In 2018, the category just backlogged in April, but Charlie
Oppenheim, the Chief of the State Department Visa Control and Reporting
Division, was unclear as to whether high demand for EB-1 visas would be
ongoing, but if not, that China EB-1 final action dates could be advanced
late in the summer.

Other advantages of the EB-1C category are not only the faster immigration
that will generally include all members of the family and even children who
have reached the age of 20 prior to the start of the case, but also the
ability of others to work and ultimately immigrate through the same U. S.
company, lesser attention to source of funds, on how the funds are
transmitted to this country, the possible lesser required amount of
investment, and that this form of immigration does not involve a
conditional green card. It should be remarked here that as the individual
would be coming over as manager or executive, he or she would be expected
to work in the U. S. company in that capacity rather than just being a
passive investor. But even here, an interested individual could use the
same tactic employed in many EB-5 cases of having the spouse be the
principal applicant, the only difference being that the spouse would also
have to have the qualifying experience of being a manager or executive in
the China company for at least one out of the past three years prior to the
filing.

The connection between the two companies could eventually allow other
managers, executives, and persons of specialized knowledge with qualifying
experience in the China company to enter the U. S. quickly on nonimmigrant
L-1 intracompany transferee visas to work for the U. S. enterprise. If the
U. S. company later wished to petition for their permanent residences,
managers and executives could qualify without needing to go through the
Department of Labor for PERM labor certification. Those under specialized
knowledge would have to obtain a labor certification and qualify under
another category, EB-2 for advanced degrees or for persons of exceptional
ability, or EB-3 for professionals with a baccalaureate degree or 2 years
of required skilled work experience. For the month of April 2018, immigrant
visa availability under EB-2 is open to China-born who began their labor
certification applications prior to August 1, 2014, and for those under
EB-3 who began their papers prior to June 1, 2015. The projected time
period for China EB-2 cases is approximately 3-5 years and for EB-3 3
years.

A prime concern in EB-5 investment cases to U.S.C.I.S. is the source of
funds to ensure that they are actually from the investor and that the funds
are not from illegal sources. Documenting the source of funds is usually a
painstaking process. Although there is always a concern with ill-gotten
gains, that is not of paramount concern in EB-1C cases, and the funds do
not have to emanate from the individual, but can come directly from the
China company. Also in EB-5 cases, there is great concern with the transfer
of funds to show a paper trail of the funds from the investor in China to
an account in the U. S. As the funds do not have to directly come from the
individual in an EB-1C multinational executive/manager case, the paper
trail could be directly from the company in China through banking
institutions to an account in the U. S. or even to the owners of the
company to be acquired.

There is no fixed amount of investment in EB-1C as opposed to EB-5 cases,
and the expended amount for capitalization can be less. In the scenario of
the individual or China company acquiring a U. S. company, many factors are
considered in the final price such as the customer base, goodwill, company
debt, receivables, inventory, willingness or need to quickly sell, etc.
Also the individual or China company would not have to acquire the entire
company, but just enough to have majority control. The individual or China
company could leave the present U. S. owners with minority shares or even
have a joint venture with a partner or partners as long as the individual
or China company winds up with at least 50% of the U. S. company.

Finally, once the priority date is reached for an EB-5 case and the
individual approved for residence status, he or she is assigned conditional
residence for a two-year period of time, and must then file an I-829
Petition by Entrepreneur to Remove Conditions (present fee $3835) to remove
the conditional basis of the residence status. The I-829 must show that all
conditions promised in the I-526 approval were met. That is not a case for
an EB-1C approval which is permanent and does not involve a further
application and/or interview in the future.

With the uncertainty and unfavorable outlook of many in Congress
surrounding the EB-5 program raising a huge question as to whether the
China backlog situation will be remedied, it might well be in the interest
of those who fit the above bill to look into the possibilities of EB-1C
immigration.

About The Author

Alan Lee, Esq. The author is an exclusive practitioner of immigration law based in New York City with an AV preeminent rating in the Martindale-Hubbell Law Directory for 20+ years, registered in the Bar Register of Preeminent Lawyers, on the New York Super Lawyers list (2011-12, 2013-14, 2014-2015, 2015-2017), and recognized as a New York Area Top Rated Lawyer. He has written extensively on immigration over the past years for Interpreter Releases, Immigration Daily, and the ethnic newspapers, World Journal, Sing Tao, Epoch Times, Pakistan Calling, Muhasba and OCS; testified as an expert on immigration in civil court proceedings; and is a regular contributor to Martindale-Hubbell’s Ask-a-Lawyer program. His article, "The Bush Temporary Worker Proposal and Comparative Pending Legislation: an Analysis" was Interpreter Releases' cover display article at the American Immigration Lawyers Association annual conference in 2004; his 2004 case in the Second Circuit Court of Appeals, Firstland International v. INS, successfully challenged Legacy INS' policy of over 40 years of revoking approved immigrant visa petitions under a nebulous standard of proof, although its central holding that the government had to notify approved immigrant petition holders of the revocation prior to the their departure to the U. S. for the petition to be able to be revoked was short-lived as it was specifically targeted in the Intelligence Reform Act of 2004 (which in response changed the language of the revocation statute itself). Yet Firstland lives on as precedent that the government must comply with nondiscretionary duties established in law, and such failure is reviewable in federal courts. His 2015 case, Matter of Leacheng International, Inc., with the Administrative Appeals Office of USCIS (AAO) set nation-wide standards on the definition of “doing business” for multinational executives and managers to gain immigration benefits.

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